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Added Value in Dairy Drinks, Milk and Cream - UK - May 2015

OVERVIEW
What you need to know
Products covered in this report
EXECUTIVE SUMMARY
The market
Sales decline in 2014
Figure 1: Market size and forecast of the dairy drinks, milk and cream market, by value, 2009-19
The consumer
Chilled cow’s milk dominates the market
Figure 2: Types of milk/milk drinks used in the last three months, February 2015
Cold cereal is the most popular use for milk
Figure 3: Milk/milk drinks usage occasions in the last three months, February 2015
Cream is most popular as a dessert/cake accompaniment
51% of consumers would pay more than £1 for a four-pint bottle of milk
Figure 4: How much milk users would pay for a four-pint bottle of milk, February 2015
Fortified milks popular with one in four milk users
Figure 5: Interest in selected milk/milk drink and cream product concepts, February 2015
Filtered milk fails to resonate with consumers
Figure 6: Agreement with selected attitudes towards milk, milk drinks and cream, February 2015
Companies, Brands and Innovation
White milk market dominated by own-label
Figure 7: Leading manufacturers’ shares of the UK white milk market^ by value, 2014/15*
Dairy alternatives and lactose-free milks in fast growth
Arla launches Big Milk aimed at kids
ISSUES AND INSIGHTS
Time to launch a ‘fair pay’ standard for British milk?
The facts
The implications
Placing standard white milk under retailers’ economy ranges could help them build category value
The facts
The implications
Flavoured milks must combat health concerns to stem decline
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Milk price wars continue to erode fresh white milk value
Total market value forecast to continue its decline
Whole milk sees best volume performance
Cow’s milk alternatives buoy fresh white milk volumes
Farmgate milk prices fall in 2014
EU milk production quotas abolished from spring 2015
Products which milk is used with, such as breakfast cereals, see sales declines
MARKET SIZE AND FORECAST
White milk falls back into value decline following grocer price cuts
Figure 8: UK retail sales of dairy drinks, milk and cream, by value, by main segment, 2009-19
Figure 9: UK retail sales of dairy drinks, milk and cream, by volume, by main segment, 2009-19
Flat white milk volumes
Total market volume forecast to climb against falling value
Figure 10: UK retail sales and forecast of dairy drinks, milk and cream, by value, 2009-19
Figure 11: UK retail sales and forecast of dairy drinks, milk and cream, by volume, 2009-19
SEGMENT PERFORMANCE
White milk
Figure 12: Retail sales of white milk (fresh and long-life), by type, by value and volume, 2013 and 2014
Whole milk sees greatest increase in volume
Figure 13: Retail sales of fresh white milk, by type, by value and volume, 2013 and 2014
Flavoured milk
Cream
Figure 14: Retail sales of cream, by type, by value and volume, 2013 and 2014
MARKET DRIVERS
Farmgate milk prices fall sharply in 2014
Figure 15: UK farmgate milk prices, 2010-14
Uncertainty over impact of abolition of EU milk quotas on UK milk market
Little growth from products typically eaten/drunk with milk
KEY PLAYERS – WHAT YOU NEED TO KNOW
Own-label accounts for three quarters of white milk market value
Müller Wiseman set to acquire Dairy Crest’s Dairies division
FRijj launches lower-sugar variants
Own-label accounts for 70% of cream market value
Adspend on milk, milk drinks and cream up 40% year-on-year
Booths rebrands its own-label milk ‘Fair Milk’
Global launches include milk-based energy drinks and ‘ultra-filtered’ milk
Lighter cream and cream alternative launches continue apace
MARKET SHARE
Cream
Figure 16: Leading brands’ sales in the UK cream market, by value, 2013/14 and 2014/15
Figure 17: Leading manufacturers’ sales in the UK cream market, by value, 2013/14 and 2014/15
Flavoured milk
Figure 18: Leading brands’ sales in the UK flavoured milk market, by value, 2013/14 and 2014/15
Figure 19: Leading manufacturers’ sales in the UK flavoured milk market, by value, 2013/14 and 2014/15
FRijj remains market leader in flavoured milk
Müller set to re-enter UK flavoured milk market through purchase of FRijj
All change for Arla in flavoured milk
White milk
Figure 20: Leading brands’ sales in the UK white milk^ market, by value, 2013/14 and 2014/15
Figure 21: Leading manufacturers’ sales in the UK white milk^ market, by value, 2013/14 and 2014/15
Dairy Crest sells its liquid milk business to Müller Wiseman…
…as Graham’s The Family Dairy becomes a more sizeable competitor
Alpro sees sales surge after wave of NPD
Cravendale struggles
But increased Morrisons supply and the launch of Big Milk should boost Arla’s milk sales
BRAND COMMUNICATION AND PROMOTION
2014 adspend up 40% year on year
Figure 22: Share of adspend on milk, milk, drinks and cream, by category, 2011-14
Arla is the biggest spender on ad space in the market in 2014
Figure 23: Top 10 advertisers in the dairy drinks, milk and cream market, 2011-14
Arla asks consumers to support farmers by buying its products
Retailers move to promote the ‘fairness’ of their milk procurement in 2015
Weetabix spends big on launch campaign
Figure 24: Top 10 brands, by adspend in the dairy drinks, milk and cream market, 2011-14
Alpro more than doubles adspend in 2014
LAUNCH ACTIVITY AND INNOVATION
White milk accounts for just a third of new launches in the market
Figure 25: New product launches within the UK dairy drinks and milk market, by sub-category, 2011-14
Arla leads new launches in 2014
Kids get new milk drinks with added convenience
Growth in allergen claims reflects strong growth in dairy alternatives
Figure 26: New product launches within the UK dairy drinks and milk and market, by top 10 claims, 2011-14
Coca-Cola launches new premium milk in US
Booths rebrands its own-label milk as Fair Milk
Healthier creams and cream alternative launches continue apace
Retailers use flavoured creams as a differentiator during seasonal events
THE CONSUMER – WHAT YOU NEED TO KNOW
Penetration of milk and milk drinks stands at 94%
Cold cereal is the most popular use for milk
Usage of cream/buttermilk stands at 60%
Half of standard milk users willing to pay over £1 for a four pint bottle
Fortified milks spark interest amongst a significant minority of users
Flavoured milk with a hint of flavour could help combat sugar concerns
Most consumers don’t see filtered milk’s main selling point
Cream faces competition from yogurt
USAGE OF MILK/MILK DRINKS AND CREAM
Usage of milk/milk drinks
Figure 27: Types of milk/milk drinks used in the last three months, February 2015
More than nine in 10 Brits drink milk
Semi-skimmed milk is most widely used milk type
Figure 28: Types of milk/milk drinks used in the last three months, February 2015
Usage of cream and buttermilk
Figure 29: Usage of cream and buttermilk in the last three months, February 2015
USAGE OCCASIONS FOR MILK/MILK DRINKS AND CREAM
With cold cereal is most popular usage occasion for milk/milk drinks
Figure 30: Milk/milk drinks usage occasions in the last three months, February 2015
Mixed fortunes of hot drinks could impact milk usage in different ways
Cream is most popular as a dessert/cake accompaniment
Figure 31: Cream usage occasions in the last three months, February 2015
HOW MUCH CONSUMERS ARE PREPARED TO PAY FOR MILK
Figure 32: How much milk users would pay for a four-pint bottle of milk, February 2015
INTEREST IN MILK/MILK DRINK AND CREAM PRODUCT CONCEPTS
Figure 33: Interest in selected milk/milk drink and cream product concepts, February 2015
High interest in functional milks/milk drinks
One in four interested in milk from cows fed only on grass and hay
Scope for chocolate confectionery brands to extend into fresh creams
Milk with a hint of flavour appeals to one in five
Milk with cream sitting on top appeals to one in six
Scope for alcohol brands to extend into milk category
ATTITUDES TOWARDS MILK/MILK DRINKS AND CREAM
Figure 34: Agreement with selected attitudes towards milk, milk drinks and cream, February 2015
Two thirds of consumers see yogurt as healthier than cream
Filtered milk brands must do more to educate consumers
49% of consumers agree supermarkets should sell economy fresh milk
Milk could learn from single-variety teas and wines
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Fan chart forecast
Abbreviations
Consumer research methodology
APPENDIX – LAUNCH ACTIVITY AND INNOVATION
Figure 35: New product launches within the UK dairy drinks and milk market, by branded/own-label share, 2011-14
Figure 36: New product launches within the UK dairy drinks and milk and market, by top 10 ultimate owner companies, 2011-14
APPENDIX – MARKET SIZE AND FORECAST
Total market
Figure 37: UK retail sales of dairy drinks, milk and cream, by value and volume, 2009-19
Figure 38: Best- and worst-case forecasts for the UK dairy drinks, milk and cream market, by value, 2014-19
Figure 39: Best- and worst-case forecasts for the UK dairy drinks, milk and cream market, by volume, 2014-19
White milk
Figure 40: UK retail sales of white milk (fresh and long-life), by value and volume, 2009-19
Figure 41: UK retail sales and forecast of white milk (fresh and long-life), by value, 2009-19
Figure 42: UK retail sales and forecast of white milk (fresh and long-life), by volume, 2009-19
Figure 43: Best- and worst-case forecasts for the UK white milk (fresh and long-life) market, by value, 2014-19
Figure 44: Best- and worst-case forecasts for the UK white milk (fresh and long-life) market, by volume, 2014-19
Flavoured milk
Figure 45: UK retail sales of flavoured milk, by value and volume, 2009-19
Figure 46: UK retail sales and forecast of flavoured milk, by value, 2009-19
Figure 47: UK retail sales and forecast of flavoured milk, by volume, 2009-19
Figure 48: Best- and worst-case forecasts for the UK flavoured milk market, by value, 2014-19
Figure 49: Best- and worst-case forecasts for the UK flavoured milk market, by volume, 2014-19
Cream
Figure 50: UK retail sales of cream, by value and volume, 2009-19
Figure 51: UK retail sales and forecast of cream, by value, 2009-19
Figure 52: UK retail sales and forecast of cream, by volume, 2009-19
Figure 53: Best- and worst-case forecasts for the UK cream market, by value, 2014-19
Figure 54: Best- and worst-case forecasts for the UK cream market, by volume, 2014-19

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